Permalink Submitted by Alan Spross on Mon, 2012-05-07 17:01
The owner whose SSN is on the account would report the full amount of dividends, cap gains etc, but then show a subtraction for the other owner’s ownership share using the “nominee” procedures to inform the IRS the name and SSN of the other owner, who will then report their share on their own return. That way each will pay taxes according to their interests. The interests need not be 50-50.
Permalink Submitted by Alan Spross on Mon, 2012-05-07 17:32
If the income is reported correctly, one owner could gift the other an amount to pay the taxes.
But more likely, your question related to reporting the income on only one return and this is not allowable since it would enable taxable income to be deflected to the lower bracket owner and allow the higher bracket owner to avoid taxes on dividends and cap gains.
Permalink Submitted by Alan Spross on Mon, 2012-05-07 17:01
The owner whose SSN is on the account would report the full amount of dividends, cap gains etc, but then show a subtraction for the other owner’s ownership share using the “nominee” procedures to inform the IRS the name and SSN of the other owner, who will then report their share on their own return. That way each will pay taxes according to their interests. The interests need not be 50-50.
Permalink Submitted by Rick Tenison on Mon, 2012-05-07 17:09
Is it ok for the taxes to be paid by just one of the owners?
Permalink Submitted by Alan Spross on Mon, 2012-05-07 17:32
If the income is reported correctly, one owner could gift the other an amount to pay the taxes.
But more likely, your question related to reporting the income on only one return and this is not allowable since it would enable taxable income to be deflected to the lower bracket owner and allow the higher bracket owner to avoid taxes on dividends and cap gains.